Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
2022-001 Finding Federal Agency U. S. Department of Education Passed-through Mississippi Department of Education Assistance Listing Number: AL # 84.425 D Program Title: Elementary and Secondary School Emergency Relief II Compliance Requirement: Allowable Cost Repeat Finding from Prior Audit? No Prior Audit Finding Number: N/A Material Weakness Condition: The district requested reimbursement for pre-award COVID related expenditures which were originally paid out of the general fund in the prior fiscal year but failed to reclassify these expenditures to ESSER II funds. Criteria: 2 CFR § 200.303(a) states that a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under 2 CFR 200.458, an LEA that has not yet received ESSER fund to which it is entitled may use State or local funds to incur allowable cost, and once it receives its ESSER award, reimburse itself for the allowable cost that it incurred before receiving the Federal emergency funds. Cause: The district failed to reclassify pre-award cost in the manner specified by the Mississippi Department of Education once guidance was received instructing district the manner in which to record prior year cost to the ESSER II grant. Effect: Failure to record transactions in the manner prescribed by the Mississippi Department of Education could result in a misstatement of expenditures. An audit adjustment was proposed and made to correct. Recommendation: We recommend the District review its internal control procedures to ensure that internal controls are established and are operating effectively to ensure all costs requested for reimbursement are recorded in the proper grant fund. Views of responsible officials of the auditee: See Auditee’s Corrective Action Plan. Questioned Cost: No known questioned cost.
Assistance Listings number and name: 10.691 Good Neighbor Authority Award numbers and year: 22-GN-11030400-027 January 14, 2022 through January 12, 2027 Federal agency: U.S. Department of Agriculture (UDSA) Compliance requirements: Period of Performance Questioned costs: $42,555 Condition?Contrary to federal regulation and the County?s grant award with the U.S. Department of Agriculture (USDA), the County?s Flood Control District spent $42,555 on unallowable purchases that it requested and received reimbursement for as part of the program?s $1.4 million total expenditures. Specifically, for 1 of 2 transactions tested, the District spent $42,555 on construction-planning services for repairing flood damage before the time period the costs were allowed to be incurred and did not receive preapproval from the federal agency, as required. Effect?The USDA may require the County to reimburse the $42,555 in unallowable costs with other County monies and either require the County to return the monies or spend them on other allowable costs before the grant expiration date of January 12, 2027.1 Cause?Despite the County?s grant award with USDA specifying the period of performance requirements, the County?s existing polices to review reimbursement requests did not require verifying that preapprovals were obtained from the federal agency when costs were incurred before the grant award term?s start date. Criteria?Federal regulation and the County?s grant award terms and conditions with USDA allow the Department to charge only allowable costs incurred during the performance period, or January 14, 2022 through January 12, 2027, and require any costs incurred before the start date to be preapproved by the federal agency (2 Code of Federal Regulations [CFR] ?200.458 and USDA grant award terms ?AA). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The County should: 1. Improve existing policies and procedures for federal grants by requiring the reviewer to verify that preapprovals were obtained from the federal agency when costs were incurred before the award term?s start date. 2. Request and obtain preapproval from the federal agency for all costs incurred outside the award term?s performance period. 3. Work with the U.S Department of Agriculture to resolve the $42,555 of program monies the District spent in violation of its federal award terms, which may involve returning monies to the federal agency.1 The County?s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the County, takes appropriate and timely corrective action (2 CFR ?200.513[c]). Further, it requires that federal awarding agencies? management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR ?200.521).
2022-005: Internal Control Over Compliance and Compliance with Period of Performance Program: U.S. Department of State AL Number: 19.016 AL Name: Iraq Assistance Program Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SLMAQM19GR2288 September 29, 2019 through June 30,2022 Program: U.S. Department of State AL Number: 19.518 AL Name: Overseas Refugee Assistance Program for Western Hemisphere Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SPRMCO20CA0209 September 20, 2020 through September 29, 2021 N/A September 20, 2021 through September 29, 2022 Criteria - CFR ?200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its grants? period of performance process. In accordance with CFR Section 200.403(h), cost must be incurred during the approved budget period. The federal awarding agency is authorized at its discretion to waive prior written approvals to carry forward unobligated balances to subsequent budget period pursuant to ?200.308(e)(3). In accordance with CFR Section 200.458, pre-award costs are those incurred prior to the effective date of the federal award or subaward directly pursuant to the negotiation and in anticipation of the federal award where such costs are necessary for efficient and timely performance of the scope of the work. Such costs are allowable only to the extent they would have been allowable if incurred after the date of the federal award and only with the written approval of the federal awarding agency. In accordance with CFR Section 200.344, the federal awarding agency or pass-through entity will close out the federal award when it determines that all applicable administrative actions and all required work of the federal award have been completed by the nonfederal entity. Per CFR Section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance. Condition ? During our testing of period of performance, we noted exceptions in the ability of management to support expenditures were incurred and charged to federal programs within the period of performance. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained to evidence that costs were incurred during the period of performance and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect - The lack of adherence to the established internal control procedures around the period of performance of the award can lead to noncompliance with laws, regulations, and the provisions of grant agreements, which could ultimately lead to expenditures not being charged to the major programs in the correct period. Questioned Costs ? $29,459 Context: Assistance Listing Number: 19.016 During our testing of the period of performance compliance requirement for grant award periods that ended during the fiscal year, we sampled 12 expenditures, totaling $292,901, for the Iraq Assistance Program and noted one item amounting to $28,766 did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Additionally, during our testing of the period of performance compliance requirement for grant costs incurred throughout the year, we sampled 40 expenditures, totaling $11,811, for the Iraq Assistance Programs and noted that four items, totaling $672, did not have proper documentation for the allocation of the expenditure. Assistance Listing Number: 19.518 During our testing of the period of performance compliance requirement for grant award periods that started and ended during the fiscal year, we sampled 81 expenditures, totaling $15,252, for the Overseas Refugee Assistance Program for Western Hemisphere and noted two items, totaling $21, did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Repeat Finding - This finding is not a repeat finding. Recommendation - We recommend that the Organization ensure its policies and procedures ensure that documentation of when the expenditure was incurred and liquidated is maintained and that these policies and procedures are followed on a consistent basis. Views of Responsible Officials - Management agrees with the finding and takes responsibility to comply with the period of performance compliance requirements. Management through the local offices has already developed a policy to ensure that the period of performance is adhered to.
2022-005: Internal Control Over Compliance and Compliance with Period of Performance Program: U.S. Department of State AL Number: 19.016 AL Name: Iraq Assistance Program Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SLMAQM19GR2288 September 29, 2019 through June 30,2022 Program: U.S. Department of State AL Number: 19.518 AL Name: Overseas Refugee Assistance Program for Western Hemisphere Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SPRMCO20CA0209 September 20, 2020 through September 29, 2021 N/A September 20, 2021 through September 29, 2022 Criteria - CFR ?200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its grants? period of performance process. In accordance with CFR Section 200.403(h), cost must be incurred during the approved budget period. The federal awarding agency is authorized at its discretion to waive prior written approvals to carry forward unobligated balances to subsequent budget period pursuant to ?200.308(e)(3). In accordance with CFR Section 200.458, pre-award costs are those incurred prior to the effective date of the federal award or subaward directly pursuant to the negotiation and in anticipation of the federal award where such costs are necessary for efficient and timely performance of the scope of the work. Such costs are allowable only to the extent they would have been allowable if incurred after the date of the federal award and only with the written approval of the federal awarding agency. In accordance with CFR Section 200.344, the federal awarding agency or pass-through entity will close out the federal award when it determines that all applicable administrative actions and all required work of the federal award have been completed by the nonfederal entity. Per CFR Section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance. Condition ? During our testing of period of performance, we noted exceptions in the ability of management to support expenditures were incurred and charged to federal programs within the period of performance. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained to evidence that costs were incurred during the period of performance and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect - The lack of adherence to the established internal control procedures around the period of performance of the award can lead to noncompliance with laws, regulations, and the provisions of grant agreements, which could ultimately lead to expenditures not being charged to the major programs in the correct period. Questioned Costs ? $29,459 Context: Assistance Listing Number: 19.016 During our testing of the period of performance compliance requirement for grant award periods that ended during the fiscal year, we sampled 12 expenditures, totaling $292,901, for the Iraq Assistance Program and noted one item amounting to $28,766 did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Additionally, during our testing of the period of performance compliance requirement for grant costs incurred throughout the year, we sampled 40 expenditures, totaling $11,811, for the Iraq Assistance Programs and noted that four items, totaling $672, did not have proper documentation for the allocation of the expenditure. Assistance Listing Number: 19.518 During our testing of the period of performance compliance requirement for grant award periods that started and ended during the fiscal year, we sampled 81 expenditures, totaling $15,252, for the Overseas Refugee Assistance Program for Western Hemisphere and noted two items, totaling $21, did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Repeat Finding - This finding is not a repeat finding. Recommendation - We recommend that the Organization ensure its policies and procedures ensure that documentation of when the expenditure was incurred and liquidated is maintained and that these policies and procedures are followed on a consistent basis. Views of Responsible Officials - Management agrees with the finding and takes responsibility to comply with the period of performance compliance requirements. Management through the local offices has already developed a policy to ensure that the period of performance is adhered to.
2022-006: Internal Control Over Compliance and Compliance with Period of Performance Program: U.S. Department of State AL Number: 19.518 AL Name: Overseas Refugee Assistance Program for Western Hemisphere Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SPRMCO20CA0209 September 20, 2020 through September 29, 2021 N/A September 20, 2021 through September 29, 2022 Criteria ? CFR ?200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its grants? period of performance process. In accordance with CFR Section 200.403(h), cost must be incurred during the approved budget period. The federal awarding agency is authorized at its discretion to waive prior written approvals to carry forward unobligated balances to subsequent budget period pursuant to ?200.308(e)(3). In accordance with CFR Section 200.458, pre-award costs are those incurred prior to the effective date of the federal award or subaward directly pursuant to the negotiation and in anticipation of the federal award where such costs are necessary for efficient and timely performance of the scope of the work. Such costs are allowable only to the extent they would have been allowable if incurred after the date of the federal award and only with the written approval of the federal awarding agency. In accordance with CFR Section 200.344, the federal awarding agency or pass-through entity will close out the federal award when it determines that all applicable administrative actions and all required work of the federal award have been completed by the nonfederal entity. Per CFR Section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance. Condition ? During our testing of period of performance, we noted exceptions where expenditures were incurred outside of the grant?s performance period. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained to evidence that costs were incurred during the period of performance and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect - The lack of adherence to the established internal control procedures around the period of performance of the award can lead to noncompliance with law and regulations and possible loss of funding for the related program. Questioned Costs ? $125 Context: During our testing of the allowable costs/cost principles compliance requirements, we sampled 25 nonpayroll expenditures, totaling $6,365, for the Overseas Refugee Assistance Program for Western Hemisphere and noted that four items, totaling $125, were incurred and paid outside of the grant award period. Repeat Finding - This finding is a repeat finding from prior year. This finding was reported as finding 2021-001 in the 2021 reporting package. Recommendation - We recommend management revisits and considers revising its internal procedures around detecting expenditures incurred outside of the period of performance of the awards. Views of Responsible Officials - Management agrees with the finding and takes responsibility to comply with the period of performance compliance requirements. Management is emphasizing prompt period closing to ensure that no items are recorded in the wrong period.
2022-005: Internal Control Over Compliance and Compliance with Period of Performance Program: U.S. Department of State AL Number: 19.016 AL Name: Iraq Assistance Program Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SLMAQM19GR2288 September 29, 2019 through June 30,2022 Program: U.S. Department of State AL Number: 19.518 AL Name: Overseas Refugee Assistance Program for Western Hemisphere Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SPRMCO20CA0209 September 20, 2020 through September 29, 2021 N/A September 20, 2021 through September 29, 2022 Criteria - CFR ?200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its grants? period of performance process. In accordance with CFR Section 200.403(h), cost must be incurred during the approved budget period. The federal awarding agency is authorized at its discretion to waive prior written approvals to carry forward unobligated balances to subsequent budget period pursuant to ?200.308(e)(3). In accordance with CFR Section 200.458, pre-award costs are those incurred prior to the effective date of the federal award or subaward directly pursuant to the negotiation and in anticipation of the federal award where such costs are necessary for efficient and timely performance of the scope of the work. Such costs are allowable only to the extent they would have been allowable if incurred after the date of the federal award and only with the written approval of the federal awarding agency. In accordance with CFR Section 200.344, the federal awarding agency or pass-through entity will close out the federal award when it determines that all applicable administrative actions and all required work of the federal award have been completed by the nonfederal entity. Per CFR Section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance. Condition ? During our testing of period of performance, we noted exceptions in the ability of management to support expenditures were incurred and charged to federal programs within the period of performance. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained to evidence that costs were incurred during the period of performance and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect - The lack of adherence to the established internal control procedures around the period of performance of the award can lead to noncompliance with laws, regulations, and the provisions of grant agreements, which could ultimately lead to expenditures not being charged to the major programs in the correct period. Questioned Costs ? $29,459 Context: Assistance Listing Number: 19.016 During our testing of the period of performance compliance requirement for grant award periods that ended during the fiscal year, we sampled 12 expenditures, totaling $292,901, for the Iraq Assistance Program and noted one item amounting to $28,766 did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Additionally, during our testing of the period of performance compliance requirement for grant costs incurred throughout the year, we sampled 40 expenditures, totaling $11,811, for the Iraq Assistance Programs and noted that four items, totaling $672, did not have proper documentation for the allocation of the expenditure. Assistance Listing Number: 19.518 During our testing of the period of performance compliance requirement for grant award periods that started and ended during the fiscal year, we sampled 81 expenditures, totaling $15,252, for the Overseas Refugee Assistance Program for Western Hemisphere and noted two items, totaling $21, did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Repeat Finding - This finding is not a repeat finding. Recommendation - We recommend that the Organization ensure its policies and procedures ensure that documentation of when the expenditure was incurred and liquidated is maintained and that these policies and procedures are followed on a consistent basis. Views of Responsible Officials - Management agrees with the finding and takes responsibility to comply with the period of performance compliance requirements. Management through the local offices has already developed a policy to ensure that the period of performance is adhered to.
2022-006: Internal Control Over Compliance and Compliance with Period of Performance Program: U.S. Department of State AL Number: 19.518 AL Name: Overseas Refugee Assistance Program for Western Hemisphere Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SPRMCO20CA0209 September 20, 2020 through September 29, 2021 N/A September 20, 2021 through September 29, 2022 Criteria ? CFR ?200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its grants? period of performance process. In accordance with CFR Section 200.403(h), cost must be incurred during the approved budget period. The federal awarding agency is authorized at its discretion to waive prior written approvals to carry forward unobligated balances to subsequent budget period pursuant to ?200.308(e)(3). In accordance with CFR Section 200.458, pre-award costs are those incurred prior to the effective date of the federal award or subaward directly pursuant to the negotiation and in anticipation of the federal award where such costs are necessary for efficient and timely performance of the scope of the work. Such costs are allowable only to the extent they would have been allowable if incurred after the date of the federal award and only with the written approval of the federal awarding agency. In accordance with CFR Section 200.344, the federal awarding agency or pass-through entity will close out the federal award when it determines that all applicable administrative actions and all required work of the federal award have been completed by the nonfederal entity. Per CFR Section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance. Condition ? During our testing of period of performance, we noted exceptions where expenditures were incurred outside of the grant?s performance period. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained to evidence that costs were incurred during the period of performance and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect - The lack of adherence to the established internal control procedures around the period of performance of the award can lead to noncompliance with law and regulations and possible loss of funding for the related program. Questioned Costs ? $125 Context: During our testing of the allowable costs/cost principles compliance requirements, we sampled 25 nonpayroll expenditures, totaling $6,365, for the Overseas Refugee Assistance Program for Western Hemisphere and noted that four items, totaling $125, were incurred and paid outside of the grant award period. Repeat Finding - This finding is a repeat finding from prior year. This finding was reported as finding 2021-001 in the 2021 reporting package. Recommendation - We recommend management revisits and considers revising its internal procedures around detecting expenditures incurred outside of the period of performance of the awards. Views of Responsible Officials - Management agrees with the finding and takes responsibility to comply with the period of performance compliance requirements. Management is emphasizing prompt period closing to ensure that no items are recorded in the wrong period.
2022-005: Internal Control Over Compliance and Compliance with Period of Performance Program: U.S. Department of State AL Number: 19.016 AL Name: Iraq Assistance Program Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SLMAQM19GR2288 September 29, 2019 through June 30,2022 Program: U.S. Department of State AL Number: 19.518 AL Name: Overseas Refugee Assistance Program for Western Hemisphere Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SPRMCO20CA0209 September 20, 2020 through September 29, 2021 N/A September 20, 2021 through September 29, 2022 Criteria - CFR ?200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its grants? period of performance process. In accordance with CFR Section 200.403(h), cost must be incurred during the approved budget period. The federal awarding agency is authorized at its discretion to waive prior written approvals to carry forward unobligated balances to subsequent budget period pursuant to ?200.308(e)(3). In accordance with CFR Section 200.458, pre-award costs are those incurred prior to the effective date of the federal award or subaward directly pursuant to the negotiation and in anticipation of the federal award where such costs are necessary for efficient and timely performance of the scope of the work. Such costs are allowable only to the extent they would have been allowable if incurred after the date of the federal award and only with the written approval of the federal awarding agency. In accordance with CFR Section 200.344, the federal awarding agency or pass-through entity will close out the federal award when it determines that all applicable administrative actions and all required work of the federal award have been completed by the nonfederal entity. Per CFR Section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance. Condition ? During our testing of period of performance, we noted exceptions in the ability of management to support expenditures were incurred and charged to federal programs within the period of performance. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained to evidence that costs were incurred during the period of performance and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect - The lack of adherence to the established internal control procedures around the period of performance of the award can lead to noncompliance with laws, regulations, and the provisions of grant agreements, which could ultimately lead to expenditures not being charged to the major programs in the correct period. Questioned Costs ? $29,459 Context: Assistance Listing Number: 19.016 During our testing of the period of performance compliance requirement for grant award periods that ended during the fiscal year, we sampled 12 expenditures, totaling $292,901, for the Iraq Assistance Program and noted one item amounting to $28,766 did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Additionally, during our testing of the period of performance compliance requirement for grant costs incurred throughout the year, we sampled 40 expenditures, totaling $11,811, for the Iraq Assistance Programs and noted that four items, totaling $672, did not have proper documentation for the allocation of the expenditure. Assistance Listing Number: 19.518 During our testing of the period of performance compliance requirement for grant award periods that started and ended during the fiscal year, we sampled 81 expenditures, totaling $15,252, for the Overseas Refugee Assistance Program for Western Hemisphere and noted two items, totaling $21, did not have adequate supporting documentation for the subrecipient expenditures charged to the program. Repeat Finding - This finding is not a repeat finding. Recommendation - We recommend that the Organization ensure its policies and procedures ensure that documentation of when the expenditure was incurred and liquidated is maintained and that these policies and procedures are followed on a consistent basis. Views of Responsible Officials - Management agrees with the finding and takes responsibility to comply with the period of performance compliance requirements. Management through the local offices has already developed a policy to ensure that the period of performance is adhered to.